Interest rates, which acted as a catalyst for price gains throughout much of 2024, now seem to be turning into an obstacle for continued growth.
During the Christmas holiday lull, Bitcoin (BTC) appeared ready to surge past the $100,000 mark after briefly falling below $93,000 earlier in the week. However, the rally faltered near $99,800 as Asian markets opened on Thursday morning, and prices quickly retreated to around $95,000 within hours.
At the time of writing, Bitcoin was trading at $95,300, reflecting a 3.1% decline over the past 24 hours.
The broader CoinDesk 20 Index also recorded a drop of 4.2% in the same period. Leading altcoins such as Ethereum (ETH), Solana (SOL), XRP, Cardano (ADA), and Avalanche (AVAX) experienced losses ranging between 4% and 7%.
In traditional markets, U.S. stock futures indicated modest losses, while gold and oil prices inched slightly higher.
While Bitcoin remains up more than 100% year-to-date, the recent price retracement suggests growing pressure from macroeconomic factors. Specifically, the tailwind from previously favorable interest rate conditions appears to be reversing.
The yield on the 10-year U.S. Treasury climbed to 4.63% early Thursday, nearing its yearly high. This marks an increase of nearly 100 basis points since the Federal Reserve executed a 50 basis-point rate cut in September.
Macro analyst Jim Bianco highlighted the unusual pattern of rising long-term yields following a rate cut, describing it as a rare occurrence in recent monetary history. “The bond market will continue driving yields higher if the Fed maintains its messaging around potential rate cuts in 2025,” Bianco explained. “If the central bank doesn’t adjust its stance, bond yields could spike to levels that begin to disrupt financial stability and undermine inflation control.”
